The Australian Budget 2016 has introduced novel measures to ensure the penalisation of multinational companies if they are found transferring their profit to overseas accounts to avoid tax.

The tax rate has increased from 30 percent to 40 percent for the companies that move their profits offshore with an intention of tax avoidance. The main reason behind the increase in the tax rate in this year’s budget is believed to be the Panama Papers leakage. The leaked document contained Australia’s name on the list of nations that transfer their profit shares to overseas accounts to avoid tax payments.

The government confirmed that the penalising measures were introduced based on the Multinational Anti-Avoidance Law that was passed in December 2015. According to BBC, the first budget featured by Treasurer Scott Morrison is an attempted pitch to voters for early elections scheduled on July 2. The government inclined towards an increase in additional revenue to make payments for tax cuts. “Everyone has to pay their fair share of tax, especially large corporates and multinationals,” Morrison said while addressing the parliament.

Reports have revealed that the MNCs that transfer their profit shares overseas will be taxed under new Diverted Profits Tax (DPT), which is in no way different from the UK’s “Google tax” introduced in 2015. The new tax rates will target the companies that transfer their share of profits offshore “through arrangements involving related parties.” According to the Computer World, due to the shifting of profits, less than 80 percent of tax is paid overseas while keeping the amount in Australia will still mean the regular payment of complete and full taxes of the profit shares. This way, MNC’s avoid tax payment to secure their profits.

“Where such arrangements are entered into, this measure will apply a 40 percent tax on diverted profits to ensure that large multinationals are paying sufficient tax in Australia,” the Budget 2016 papers stated.